Operating result

Operating result

 

The operating result of the life segment amounted to € 2,645 million, an increase of +4.3% compared to € 2,535 million in 2012. The increase is primarily due to the favorable trend in the financial margin and simultaneous containment of costs.

This improvement is also confirmed by comparing the fourth quarter of 2013 compared to the corresponding quarter of the previous year (+36% on a comparable basis), due primarily to the reduction of operating costs.

Finally, the operating profitability8 of the life segment amounted to 0.77% (0.78% at December 31, 2012).

8 For further information on the calculation methodology for this indicator, please refer to the appendix to this Management Report.

Technical margin
(€ million)31.12.201331.12.2012FOURTH QUARTER 2013FOURTH QUARTER 2012
Technical margin 5,743 5,786 1,526 1,577
Net earned premiums 40,971 40,949 11,251 11,720
Fee and commission from financial service activities 200 199 55 29
Net insurance claims adjusted for financial interests and
bonuses credited to policyholders
-35,506 -35,428 -9,784 -10,194
Other insurance items 78 66 5 22

The technical margin9, amounted to € 5,743 million, slightly decreasing; in particular, the contraction of the loadings was only partially offset by growth in the profitability of the protection business.

The technical margin does not include insurance operating expenses, which are reported in Total operating expenses.

9 For further information on the calculation methodology for this indicator, please refer to the appendix to this Management report.

Net investment result
(€ million)31.12.201331.12.2012FOURTH QUARTER 2013FOURTH QUARTER 2012
Net investment result 1,783 1,723 292 263
Operating income from investments 16,031 14,298 4,774 2,826
Net income from investments 11,610 8,861 2,840 1,376
Current income from investments 10,718 10644 2,661 2,618
Net operating realized gains on investments 2,089 973 468 462
Net operating impairment losses on investments -390 -1,978 -71 -1,469
Other operating net financial expenses -807 -779 -217 -235
Net income from financial instruments at fair value through profit or loss 4,421 5,437 1,934 1,450
Net income from financial instruments related to unit and index-linked policies 4,101 4,563 1,823 1,155
Net other income from financial instrumensts
at fair value through profit or loss
320 874 112 295
Policyholders' interests on operating income from investments -14,248 -12,575 -4,481 -2,562

Net investment result € 1,783 million, increased by 3.5% with respect to € 1,723 million at 31 December 2012. This trend was due to an increase in realized gains and a decrease in impairment losses which had a negative impact on the prior year. This effect was partly offset by the persistence of low interest rates that led to higher provisions for interest rate risk compared to the previous year, reflected in reduced net investment result. In addition, the net investment result was negatively impacted, compared to the corresponding period of the previous year, by a fall in income from investments at fair value through profit or loss, due to the excellent performance of financial markets, noted throughout 2012, even though the last quarter of 2013 showed a recovery.

In detail:

  • current income from investiments – which also includes current income from investments at fair value through profit or loss – amounted to € 10,718 million (€ 10,644 million at 31 December 2012), with the related current return, calculated based on investments book value, decreasing moderately to 3.8% (4.1% at 31 December 2012). In detail, the current income from fixed income instruments went from € 9,181 million at 31 December 2012 to € 9,325 million due both the aforementioned scenario of lower reinvestment rates and the persistence of a high incidence of liquidity instruments in the life portfolios, although decreasing in the reporting period. Current income from the equity portfolio decreased from € 426 million at 31 December 2012 to € 388 million. Finally, current income from investment properties remained essentially stable at € 712 million;
  • net operating realized gains on investments amounted to € 2,089 million (€ 973 million at 31 December 2012) against lower realized losses, mainly regarding Group’s government bond portfolio, compared to the same period of the previous year, which was significantly impacted by the de-risking policy adopted particularly in Italy, France and Germany;
  • net operating impairment losses on investments went from € -1,978 million atl 31 December 2012 to € -390 million due to the lower impairments recognized especially on equities securities;
  • other operating net financial expenses, which include interest expenses on operating debt and investment management expenses, amounted to € -807 million (€ -779 million at 31 December 2012);
  • net income from financial instruments related to unit and index-linked contracts went from € 4,563 million at 31 December 2012 to € 4,101 million. The variation of € -462 million was due to the change of the value of investments as a result of the lower performance of financial markets compared to the same period of the previous year;
  • net income from financial instruments at fair value through profit or loss amounted to € 320 million (€ 874 million at 31 December 2012). The change is attributable to the strong performance of the financial markets observed in the second half of 2012, which was not repeated in 2013 even though the market trend has been positive.

The policyholders’ interests on income from investments increased from € -12,575 million at 31 December 2012 to € -14,248 million, a variation of € -1.673 million. This change is mainly attributable to the effect on deferred policyholder liabilities of lower net impairment losses on investments in life portfolios.

Total operating expenses
(€ million)31.12.201331.12.2012FOURTH QUARTER 2013FOURTH QUARTER 2012
Total operating expenses -4,882 -4,975 -1,246 -1,418
Acquisition and administration costs related to insurance business -4,797 -4,970 -1,227 -1,423
Net other operating expenses -85 -5 -18 5

Total operating expenses improved from € -4,975 million at 31 December 2012 to € -4,882 million.

In detail, acquisition and administration costs related to insurance business were € -4,797 million, decreasing by 3.5% with respect to 31 December 2012. This trend is due to both the decline in acquisition costs which amounted to € 3,872 million, decreasing by -3.3% owing to the decrease observed in Germany, Central and Eastern Europe, and to the decline in administration costs. Administration costs were € 925 million, decreasing by 4.2% due to declines observed in almost all major territories of the Group, resulting from the planned initiatives to contain operating costs.

The acquisition and administration cost ratio was 10.8%, decreasing with respect to 31 December 2012 (11.1%) due to the contraction of 0.2 pps observed in the acquisition costs component.

The ratio of total administration costs related to insurance business to the average insurance provisions declined slightly to 0.29%.

The rise in other operating components was attributable to the higher provisions for risks and the positive impact on the corresponding comparative period of the release of provisions for disputes.

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Life Operating result by driver117.57 KB
Assicurazioni Generali S.p.A. - C.F. e P.IVA 00079760328